The People's Republic of China is considering adopting a new
bankruptcy law that would, for the first time, provide a
market-based framework for both state-run and private companies to
declare insolvency, as well as more protection for creditors.
A draft of the proposed new legislation was submitted to the
National People's Congress on June 21 2004 and is expected to take
effect in early 2005. The main purpose of the existing statute,
which was enacted in 1986 and applies only to state-owned
enterprises, is "to satisfy the planned development of a socialist
commodity economy... to strengthen the economic responsibility
system and democratic management". Last among the listed statutory
purposes is protection of the rights and interests of creditors and
debtors.
The main purpose of the proposed new law, intended to entirely
supersede the existing one, is stated to be the "fair hearing of
bankruptcy cases and impartial settlement of claims and debts,
protecting...